Investec, the Anglo-SA niche banking and wealth management group, has ramped up its internalisation strategy, with nearly
11,500 of its SA clients having opened private banking accounts in the UK.
The company, which has listings in both Johannesburg and London, told Business Day that there are several reasons South Africans are seeking opportunities in the UK. These include family ties and the increase in the number of South Africans studying in the UK.
“The UK is one of the largest financial hubs in the world; the region provides a platform for international wealth management and investment opportunities. Investec Group has 30 years of established presence in the UK and supports all our existing private banking clients who have access to our international offering,” the company said.
“This includes young professionals; professionals working abroad for a period of time or permanently; children of SA clients wanting to study in the UK where transactional capabilities are required; C-suite executives and entrepreneurs; and many SA clients looking to the UK for long-term property investments.”
The company has made the acquisition of private banking clients in both the UK and SA a priority. The lender has nearly 110,000 private clients in SA and has increased its footprint to five provinces, serving clients from 12 offices.
The company, headed by Fani Titi, has over the past decade fine-tuned its One Place offering, which it created in partnership with international teams across the UK, Switzerland, Mauritius and the Channel Islands.
As part of its international strategy, it has identified Switzerland as a key opportunity for its wealthy clients in SA and other jurisdictions to grow their wealth. The company sees Switzerland as more of an investment destination than a banking business for its clients. Its target market for that destination is clients with $3m or more of investable assets.
“Investec also continuously broadens its Swiss proposition for high net worth individuals. As the only financial institution of African origin with a Swiss banking licence, Investec is able to offer a fully fledged Swiss suite of wealth and financial services,” Investec said.
According to a new index by advisory firm Henley & Partners, Switzerland is the world’s best country to build multigenerational wealth. The US came in second, while Singapore was third.
Investec has traditionally not sought to be all things to all people but to build well-defined, value-adding businesses focused on serving the needs of select market niches where it can compete effectively and build scale and relevance. Its target market in SA is high net worth individuals (people who are worth at least $1m), high-income professionals, emerging and established entrepreneurs, young professionals across multiple disciplines, charities and trusts, financial advisers and intermediaries.
Business Day reported in June that data from Standard Bank shows an increase in South Africans setting up offshore bank accounts to protect their wealth from domestic economic uncertainties. The lender said it had seen a 121% increase in the number of people opening accounts overseas since June last year.
Local investors have been expanding their offshore exposure after the National Treasury’s decision to allow local pension funds to invest up to 45% overseas.
SA’s exchange control regime has two legs: the first allows anyone over the age of 18 to send R1m abroad every calendar year without obtaining a tax clearance certificate; and the other allows individuals to externalise R10m per calendar year, but this requires a tax clearance certificate.
According to Standard Bank, one of the main drivers for the surge in clients opening overseas accounts is travel and the preference for hard currency. Some South Africans plan to retire overseas and see the need to save in the currency of their choice.
Derrick Msibi, the CEO of Stanlib, one of SA’s biggest asset managers with more than R600bn of clients’ money in its custody, in 2023 flagged the flight of wealthy individuals as one of the reasons the industry will face more headwinds than tailwinds in the next two to three years.
Msibi painted a bleak picture of the industry over the next few years, saying how well the sector does would depend on how much savings there are to manage. This is influenced by how fast the economy grows, how many people have jobs, returns from capital markets and whether money is being saved or taken out of SA. He said high net worth individuals continue to emigrate and externalise their wealth.
Henley & Partners in its latest Wealth Migration Report said SA saw about 400 high net worth individuals emigrate in 2022.
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